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Econ Wrap-Up: Chicago Fed National Activity Index

4/20/2015
By Jennifer Coombs

The Chicago Fed National Activity Index (CFNAI) for the month of March did not give an overall good vibe for the economy, falling steeply to -0.42 from an already weak and downwardly revised -0.18 (from -0.11) in February. The economists note that the quarter as whole was also weak, with the 3-month average coming in at -0.27. The CFNAI designed to better gauge overall economic activity and inflationary pressure. The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity, and it is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend. The index was primarily pulled lower by the production component, which came in at a reading of -0.27 for the month. Also weak was the personal consumption & housing component, at -0.13 and employment at -0.3, which was a big step down from the +0.11 reading in February. Overall, there was only one positive component in March, sales/orders/inventories, and it was only barely in the green by +0.01.  All in all, the market is not reacting to this data because it merely confirms what we already know: March was a terrible month for most economic data.

 

Jennifer Coombs
Wall Street Strategies

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